All Forum Posts by: Justin Moy

3.7 ROE is pretty low, but with all investing the question becomes what can you do that's better on a risk adjusted basis. 

If you refi you'll have a higher rate, so what does that do to cash flow there? 

Once you get your refi cash where can you put it and at what cash flow will you get? 

Combining those properties, what will it do to your overall portfolio? 

Taking on new acquisitions also brings on new risk. Are the additional returns enough to justify taking on more risk

They will not care if you buy in other cities. They will more prioritize the people they know/like/trust so it may take longer to build deep relationships in multiple markets but no broker will care that you're dating other markets haha

The operations will be relatively the same depending on the size of the multifamily. Once you get into on site staffing things change a bit, but nothing any competent investor who is willing to learn wouldn't be able to handle. 

If you're looking to aggressively push out that much cash then I'd likely think of a few things: 

1. Get acquisitions teams/processes. 

2. Expand into other peoples deals as a passive investor (syndications, funds, private money, debt funds...)

3. Network a ton with wholesalers or flippers depending on your strategy

As you mentioned I think deal flow will be your biggest obstacle and relying on the MLS to spend that much will probably be your biggest challenge

Not too sure of the market you're in, but 5-6% year 1 seems pretty good assuming conservative underwriting if you're in a growing neighborhood. 

The cash returns tend to be relatively small compared to the appreciation returns in good areas. 

Also this is assuming your underwriting is conservative enough that if the property performs truly average you may actually get closer to 7%+ in addition to the debt paydown, tax benefits, appreciation and rent growth. 

Keep communication with a few debt brokers in the area. Debt markets are changing a ton, we used to purchase on DSCR loans but switched to conventional loans because the terms started to change and conventional was better for our properties cash flow.

Go through all the nonsense of dealing with the bank first (submit financials, run credit reports, jump through a flaming hoop...) and find out what your purchasing power and down payment expectations should be and that will help you narrow your search

Democratic presidents always hype these things up especially around election time. The common theme is always increasing the tax on the 'rich', forgiving student loan debt, and giving out more free things. 

98/100 times nothing happens and they know it, it's just a run at campaigning. 

Even if it did happen, politicians will always leave loopholes (for themselves) that great tax consultants will also be able to leverage. 

Below 5 units will be residential but different lenders will look at different requirements. 

Typically to count rental income as income to pay down the mortgage banks will look for some type of real estate experience. The rule of thumb I was given was 2 years of managing rentals. 

I'd work with a few lenders to get pre qualified as you'll still have that prequal process in the <5 unit space. 

Those small properties will see things like this. As was stated before they need to be a bit more fee heavy with the smaller purchase price, and not nearly as many lender options for a small price like that as opposed to something bigger. 

I'd still recommend getting 3-4 term sheets from different lenders. Look for banks and credit unions in the area as well.

We've used debt brokers for all of our deals. Look for a few who understand the market and work with that property size. 

The biggest points of debt due diligence right now are fixed or floating rate debt. If it's floating, rate caps are very expensive but it's a requirement in my opinion. Underwrite the deal at the maximum rate cap. 

If you can buy on a longer term fixed rate and slowly renovate the property as units turn then that would be more ideal, but if you really drastically need a capex budget then make sure your debt has a rate cap if it's floating, and ideally for as long as possible. 2+ years of the cap. 

Depending on the strategy lenders will want to know who on the team has experience executing on that. If you don't have any other larger multifamily or commercial loans, you'll likely need a partner on the deal to qualify for the financing.

There are a few people are looking into. 

Sell off the entire package to an institution. 

Sell off individual plots to individual owners or investors

Sell off phases at a time.

Hold them.